Regulations protect existing business interests from competition

California has topped another list, although it is a very dubious honor. According to a new Reason Foundation survey of U.S. Department of Labor data on occupational licensing, California requires licenses for more job categories than any other state in the nation. More and more often, Californians have to pay fees, take exams, fulfill education requirements, and cut through other red tape just to work in the occupation of their choosing.

The whole notion of the American Dream is that with hard work and determination, anyone can take advantage of the freedoms afforded here and make whatever he wants of himself. We have come to take the right to control and utilize our labor for granted, but, many people now have to seek the government’s permission in order to work in the occupation of their choice.

Over 1,000 occupations are regulated at the state level-and still more are regulated at the federal and municipal levels. In addition to occupations such as law and medicine, which are regulated by every state, California requires licenses for jobs such as butter graders, cabinetmakers, court reporters, fence erectors, locksmiths, paperhangers, recreation guides, tree trimmers and pruners, and upholsterers.

Living up to its over-regulated reputation, California leads the nation with 177 licensed occupations – nearly twice the national average of 92. Rounding out the top five are Connecticut (155), Maine (134), New Hampshire (130), and Arkansas (128). Missouri is the least licensed state with 41 licensed occupations.

With the striking exception of California, Western states tend to be less regulated than Midwestern and Eastern states. It should not be surprising, then, that California’s less-regulated neighbors such as Nevada (95 licensed occupations) and Arizona (72) are experiencing greater economic growth.

Licensing laws are often very arbitrary, as illustrated by the significant differences in the number of jobs licensed from one state to the next. Are things so drastically different just across state lines in Nevada or Arizona that this disparity could be justified? Of course not.

While occupational licensing laws are often sold as a means of “protecting” consumers from negligent or unscrupulous practitioners, instead they tend to be designed to protect existing business interests from competition. Existing fence repair companies are thrilled when state legislators make it harder for other companies to join the fence-building business. This reduced competition results in higher prices, and fewer choices, for consumers.

Courts once regularly struck down licensing laws on the grounds that they violate fundamental personal freedom and property protections included in the Fifth and Fourteenth amendments. But, unfortunately, in recent years, the courts have been more apt to sanction them.

As a result, taxpayers must jump through various regulatory hoops and seek the approval of a government licensing board just so they can work. Thus, the poor are doubly hit by occupational licensing because they must pay higher prices for goods and services performed by “licensed” tree trimmers, while also bearing the costs of satisfying licensing regulations that limit their own job opportunities.

This is not to say that certification is a bad thing. Private-sector alternatives such as voluntary certification encourage entrepreneurship and allow consumers to obtain valuable information about product and service quality while leaving them free to choose to do business with practitioners that best meet their needs.

But in California occupational licensing is being used to help existing businesses keep out competition, restrict consumer choice, destroy entrepreneurship, and drive up prices. That’s not good policy and it’s time to abolish these requirements.

Adam Summers is a senior policy analyst at Reason Foundation, a nonprofit think tank advancing free minds and free markets. He has written extensively on privatization, government reform, law and economics, and various other political and economic topics.